relationships

Norma B. Salzman on

We have several members related to other members, but not to
all the members. At most there may be 3 members related to
each other. The tax returns shows all the those members as
owning over 80% of the club as though they all have the same
interest in the club. Is this correct?

Rip West on

Yes, it very likely is correct. Each member is attributed with the ownership of any related member, so you can have several members owning over 80%.

Rip West
Saint Paul, MN

iras1 on

Yes. The constructive ownership rules combine the shares directly owned with those that could be controlled through family influence. Read the instructions for Schedule B, line 3 for more information.

Ira Smilovitz

Join me at InvestEd 2010

Investor Education at Its Best^TM
Baltimore, MD August 6 - 8, 2010
http://www.investor-education2010.org/

In a message dated 03/02/10 08:38:28 Eastern Standard Time, norma2@bivio.com writes:

We have several members related to other members, but not to
all the members. At most there may be 3 members related to
each other. The tax returns shows all the those members as
owning over 80% of the club as though they all have the same
interest in the club. Is this correct?

Norma B. Salzman on

Rip West wrote:
> Yes, it very likely is correct. Each member is attributed with the
> ownership of any related member, so you can have several members owning over
> 80%.
>  
> Rip West
> Saint Paul, MN
>  
I found my mistake. I showed everyone as related to each
other intsead of the different relationships.

Cherilyn J. Peay on

Hi,

I haven't done this yet because I expect to receive a corrected 1099. You all are ahead of me. My question...

All partners are siblings. Therefore all are related and together own 100%. What is the consequence of this as far as IRS is concerned? In reality my brother can give his share to someone else as easily as he can give it to me (in his will) so what's the issue?
Thanks for the info.
Cherilyn Peay
CEDDM #2

At 07:14 AM 3/3/2010, you wrote:

Rip West wrote:
> Yes, it very likely is correct. Each member is attributed with the
> ownership of any related member, so you can have several members owning over
> 80%.
>  
> Rip West
> Saint Paul, MN
>  
I found my mistake. I showed everyone as related to each
other intsead of the different relationships.

iras1 on

It isn't that your brother can give his shares to you (or another relative), it's that he can influence your vote on partnership matters or he could be trying to hide a majority interest in the club by "dividing" it among close relatives. There are special rules that affect majority partners in certain areas -- none of this is relevant to a typical investment club beyond the fact that reporting the constructive ownership shares is now a requirement.

Ira Smilovitz

Join me at InvestEd 2010

Investor Education at Its Best^TM
Baltimore, MD August 6 - 8, 2010
http://www.investor-education2010.org/

In a message dated 03/03/10 09:47:20 Eastern Standard Time, cpeay@comcast.net writes:

I haven't done this yet because I expect to receive a corrected 1099. You all are ahead of me. My question...

All partners are siblings. Therefore all are related and together own 100%. What is the consequence of this as far as IRS is concerned? In reality my brother can give his share to someone else as easily as he can give it to me (in his will) so what's the issue?
Thanks for the info.

Cherilyn J. Peay on

Thanks for the explanation Ira.

At 07:57 AM 3/3/2010, you wrote:

It isn't that your brother can give his shares to you (or another relative), it's that he can influence your vote on partnership matters or he could be trying to hide a majority interest in the club by "dividing" it among close relatives. There are special rules that affect majority partners in certain areas -- none of this is relevant to a typical investment club beyond the fact that reporting the constructive ownership shares is now a requirement.

Ira Smilovitz
Join me at InvestEd 2010
Investor Education at Its Best^TM
Baltimore, MD August 6 - 8, 2010
http://www.investor-education2010.org/

In a message dated 03/03/10 09:47:20 Eastern Standard Time, cpeay@comcast.net writes:

I haven't done this yet because I expect to receive a corrected 1099. You all are ahead of me. My question...

All partners are siblings. Therefore all are related and together own 100%. What is the consequence of this as far as IRS is concerned? In reality my brother can give his share to someone else as easily as he can give it to me (in his will) so what's the issue?

Thanks for the info.

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